Applicability of provision for articles assembled abroad of fabricated U.S. components in subheading 9802.00.80, HTSUS, to shoes made in the Dominican Republic

HQ 555393 July 6, 1989 CLA-2-CO:R:C 555393 RA CATEGORY: Classification TARIFF NO.: 9802.00.80, HTSUS Ms. Yvonne Williams Stratford Service Limited 19 West 34th Street - 4th Floor New York, New York 10001 RE: Applicability of provision for articles assembled abroad of fabricated U.S. components in subheading 9802.00.80, HTSUS, to shoes made in the Dominican Republic Dear Ms. Williams: This is in regard to your letter of May 4, 1989, on behalf of Reebok International Ltd., requesting a ruling on an allowance in duty for "Kahuna"shoes assembled in the Dominican Republic from U.S.-made components and Korean outsoles. FACTS: According to your letter, shoe upper parts manufactured in the U.S. will be shipped to Puerto Rico where they will be cut to shape. The cut upper parts will then be exported to the Dominican Republic to be joined by stitching or cementing, and attached to molded outsoles from Korea to form complete shoes. ISSUE: Will the assembled components of U.S. origin qualify for tariff treatment under the provisions of subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS)? LAW AND ANALYSIS: Subheading 9802.00.80, HTSUS, provides for articles assembled abroad in whole or in part of fabricated components of U.S. origin with no operations performed thereon except the joining of the components and operations incidental thereto. The components must be exported in condition ready for assembly, cannot lose their physical identity, and cannot be advanced in value or improved in condition except by being assembled with incidental operations. Duty is assessed on the appraised value of the imported merchandise less the cost or value of the U.S.- made components at the time of exportation. You indicate that the exported components are cut to size and shape in Puerto Rico and the shoe parts exported to the Dominican Republic are exported in condition ready for assembly. The assembly operations in the Dominican Republic consist of folding back the counter and stitching, stitching the gore to the back counter, stitching the gore to the throat, folding the vamp and stitching it to the back counter, stitching the sock to the upper, pulling the upper over the last, cementing the molded bottom to the upper, removing the upper from the last, and placing the removable sock into the finished shoe. The described operations are considered to be qualified assembly procedures or incidental thereto and you indicate that no other operations are required to accomplish the attachment of the U.S.-made parts to each other and to the Korean-made outsoles to produce finished shoes. In Carter Footwear, Inc. v. U.S., Slip. Op. 87-92, 11 C.I.T. - (1987), components of footwear uppers assembled in the Dominican Republic were accorded a duty allowance under the predecessor provision to subheading 9802.00.80, HTSUS, including a plastic toe reinforcement applied to the fabric vamps in a molten condition. In Headquarters Ruling Letter 553808, dated October 11, 1985, we held that U.S.- made fabricated components were entitled to an allowance in duty when assembled into ladies' footwear abroad by stitching, cementing, and heat pressing. The components were cut to size and shape when exported and did not lose their physical identity in the assembly process. Accordingly, an allowance in duty for the value of the U.S.-made components may be granted, upon compliance with sections 10.11-10.24, Customs Regulations (19 CFR 10.11-10.24), under the provisions of subheading 9802.00.80, HTSUS. HOLDING: An allowance in duty may be made for the value of fabricated components of U.S. origin which have merely been joined by means of stitching or cementing with only incidental operations to produce finished shoes with Korean-made outsoles, under the provisions of subheading 9802.00.80, HTSUS, upon compliance with applicable Customs Regulations. Sincerely, John Durant, Director Commercial Rulings Division